Infrastructure needs at odds with trust-fund realities

The American Road and Transportation Builders Association on Thursday released a report about the poor condition of the nation’s bridges, seemingly with the intent of putting pressure on Congress to address a looming fiscal shortfall in the Highway Trust Fund. Without Congressional help, the fund is expected to run out of money by late August.
The same day, two former federal officials said Congress and the Obama administration need to do a better job prioritizing spending on transportation projects and government programs to make sure there is adequate revenue for the most critical transportation needs.
“America spends most of its money on retirees” through Social Security, Medicare, Medicaid, pensions and veterans benefits, “which means we’re not investing in the future — infrastructure, education, research and development,” former congressman Tom Davis, R-Va., said at the NAFTANEXT summit in Chicago.
The need to improve infrastructure to aid trade flows between the United States, Canada and Mexico was one of the conference’s themes.
The current two-year, $105 billion transportation authorization expires at the end of September, but the Highway Trust Fund is paying out more in obligations than it takes in due to a scaling back in personal driving habits and greater auto efficiency, which have reduced gas tax collections. The HTF is the repository for the 18.4-cents-per-gallon federal gas tax and the 23.4-cents-per-gallon diesel tax, as well as certain excise taxes on commercial vehicles and components. The fuel tax has not been increased since 1993 and is not indexed to inflation, which has resulted in a 40-percent decrease in buying power. The cash balance in the HTF, as of March 28, had dwindled to $8.3 billion, despite a $9.7-billion October transfer by Congress from the Treasury.
Earlier this year, the Obama administration proposed a four-year, $302-billion spending plan for repairing and upgrading the nation's highways, bridges and transit systems, with half the money coming from a one-time transfer of revenue projected from any business tax reform Congress might enact. It would plug the hole in the Highway Trust Fund and provide it with an additional $90 billion.
The Department of Transportation is expected, within the next two weeks, to provide a more detailed proposal for a multi-year transportation spending plan. The heads of the House Transportation and Infrastructure Committee, and the Senate Environment and Public Works Committee have said they want to move surface transportation legislation to the floor of their respective houses early this summer. This would allow differences to be ironed out after the August recess and a provide a final bill to be voted on before Sept. 30, but most political observers don’t think there is much chance of a bill getting done in time, especially with mid-term elections in November.
Finding new revenues is, and has been for years, the sticking point for a transportation bill that funds highway construction and safety programs. The House Ways and Means Committee, and the Senate Finance Committee are the bodies that must first approve any expansion of user fees or other revenues dedicated to transportation. Rep. Dave Camp, the chairman of the Ways and Means Committee, in late February unveiled a comprehensive tax reform proposal that includes a $126.5-billion infusion for the HTF that would come from revenues generated by new tax collections over eight years. But Camp has since announced he doesn’t plan to run for re-election and won’t be around next year to push such a bill. That means Congress will likely have to focus on a stop-gap measure to keep federal highway aid to states flowing. The DOT is expected to slow down reimbursements to states for completed projects as early as July, and states are already making plans to curtail new investments until there is more funding certainty, a development experts say will hurt the economy.
“Letting the Highway Trust Fund investment dry up would have a devastating impact on bridge repairs,” Allison Black, chief economist at the ARTBA, said in a statement, noting the trust fund has supported $89 billion in bridge construction work by the states over the past 10 years.
“It would set back bridge improvements in every state for the next decade,” she added.
Most of the structurally deficient bridges are more than 40 years old and in need of extensive repairs, but the designation doesn’t mean they are unsafe to traverse, according to officials. Bridge decks and support structures are regularly inspected by state transportation departments for deterioration and are rated on a scale of zero to nine, with nine being considered excellent. A bridge is classified as structurally deficient if its overall rating is four or below. Authorities often place weight limits on trucks for some bridges and have to spend extra on maintenance to keep them functioning. According to ARTBA’s analysis of DOT data, the 250 most heavily crossed structurally deficient bridges are on urban interstate highways, particularly in California. Pennsylvania has the highest number of structurally deficient bridges and the highest percentage of bridges that are structurally deficient.
Davis, who served seven terms in Congress and now is director of federal programs at Deloitte LLP, said many legislators understand the need to invest in infrastructure to make the United States competitive, but the smaller-government sentiment at the grassroots of the Republican Party and even among blue-collar Democrats is so strong that politicians don’t want to risk getting bounced out of office by voting for new taxes. He predicted that Congress would pass some sort of temporary extension of the existing surface transportation bill this year, but eventually will find a way to increase revenues.
Sen. Patty Murray, D-Wash., and the American Society of Civil Engineers this month urged Congress to act quickly to restore the solvency of the HTF.
“We cannot stand by, as the Highway Trust Fund nears critically low levels, and lose new investments in our roads and bridges, especially when these are the very projects that ensure businesses can move their goods quickly and efficiently, and help ease congestion for commuters across the country. We should give states the certainty they need to avoid a construction shutdown this summer by making sure the Highway Trust Fund can continue to support projects that create jobs and spur economic growth,” she said in a statement.
The ASCE says governments at all three levels face a combined funding gap of about $94 billion a year at current spending levels.
One way for Congress to make do with limited transportation resources is not to make grants to communities for bike paths and to states for high-speed passenger rail, former U.S. Secretary of Transportation Samuel Skinner said at NAFTANEXT, which was organized by the Coalition for America’s Gateways and Trade Corridors.
“We need an honest discussion about the real role of passenger rail,” he said about one of President Obama’s priority initiatives
Skinner, who now is a part-time attorney with international law firm Greenberg Traurig (years ago, he headed motor carrier conglomerate USF Corp.), said a lot of money has been allocated by the federal government and states for high-speed rail but is not being utilized while projects go through lengthy approval processes. Passenger rail will not work well in many regions because terminals aren’t located near other transit options, so people have to make connections by renting a car, he claimed. Others have said there is limited demand for high-speed rail because people will likely fly for longer distances and drive shorter distances. And forcing passenger rail to share tracks with freight railroads will hurt the velocity of freight carriers, industry officials insist.
“I’d rather see us invest in highways, bridges, technology and ports that are really going to make goods flow quicker and drive the economy,” Skinner said.
The Obama administration early on laid out an ambitious plan to spend $53 billion over several years to connect regions of the country by rail, but amid political opposition and other difficulties, only $10.5 billion has been appropriated so far. Spending on bike paths is miniscule by comparison with the rest of the transportation budget, but is a symbol of misplaced priorities in the eyes of many business leaders.
At a NAFTANEXT press conference, industry officials and representatives from metropolitan region planning agencies renewed calls for Congress to authorize a new surface transportation bill and include a new Freight Trust Fund targeted at projects critical for goods movement.
U.S. advantages in workforce productivity and skill “could be completely offset if we don’t fix our infrastructure,” Paul Fisher, co-founder and vice chairman of CenterPoint Properties Trust, which develops industrial properties with integrated freight transportation capability, said.
Businesses have not done enough to make Congress aware that they are willing to pay extra fuel taxes if the money is dedicated for transportation infrastructure, CAGTC Executive Director Leslie Blakey said.
A dysfunctional transportation system is essentially a “hidden tax” because of wasted time and fuel consumption from being stuck in congestion and vehicle repairs associated with potholes, Blakey and Fisher said.
“Let’s have a good tax in a transportation fee and a good transportation system,” he added.